THE proposed lifting of the “quantitative restriction,” or QR, on rice has become a tense issue, pitting the administration of President Rodrigo Duterte, which largely favors lifting the QR, against farmers’ advocates, who say that the restriction on rice imports is necessary support for the Philippines’ impoverished rice farmers.
QR is a special advantage given the Philippines under the World Trade Organization (WTO), which sets a limit on the amount of rice that can be imported at a reduced tariff. This amount, called the Minimum Access Volume (MAV), is set at 850,000 metric tons. Up to that amount, rice imports can only be charged a tariff of 35 percent; above that amount, the tariff can be 50 percent, plus the shipments must have the prior approval of the National Food Authority (NFA). Along with the QR allowance, the Philippine rice sector is also free from other WTO rules of agricultural liberalization.
The QR is set to expire in July 2017; it has been extended twice, in 2005 for 10 years, and in 2015 for two more. The rationale behind granting the QR in the first place and then extending it for a number of years was to allow the Philippine rice sector to “catch up” to its potential trade competitors, an acknowledgement of how critical the grain is to our country’s well-being.
Even a cursory look at the plight of most Filipino rice farmers is clear evidence that QR hasn’t worked; government support for farmers has fallen woefully short, and the Philippines has a number of natural disadvantages – less land available for rice farming, and far less natural irrigation – compared with competitors like Thailand and Vietnam that no form of import restrictions short of an outright ban could overcome. NFA importation on a government-to-government basis annually exceeds the MAV anyway, thoroughly undermining the purpose of the restriction, and worse yet, is not counted against the restricted volume.
Even though advocates of maintaining QR assert that an open market will force Filipino rice farmers into unfair competition with cheaper imports, the unfortunate reality is that QR has boxed them into that very situation for years, and that letting it expire, despite the risks, might very well be the most economically sensible move the government could make.
Unfortunately, it seems nearly impossible to have a sensible debate about the relative merits and disadvantages of QR in the current political climate, in which advocates of keeping the restriction in place insist on conflating what should be an economic issue with political complaints. QR is just one tool that can be used to support the farming sector; keeping it will not make up for manifold shortcomings in government efforts over the past few decades. As a matter of fact, the argument could be made that the existence of QR actually discouraged government from doing more, behind the misguided belief that the partial cover from the biggest threat to Filipino farmers – outside competition – was an adequate form of support.
The second and very real problem is that the government may have no choice. Granting another extension of QR is up to the WTO, and the organization has been very vocal over the past year in expressing its alarm at growing protectionist measures around the world. When the last extension was granted last year, it was with a clear warning that it was done against the WTO’s wishes and better judgment, and that the Philippines should make the most of what would likely be the last accommodation.
All things considered, although it will not be a harmless decision, the better choice for the long term is to let the QR lapse. Doing so will improve the Philippines’ position within the WTO, and in a sense, hold the government’s feet to the fire to turn its agricultural advocacy rhetoric into real action.